Classic InDeed

Wednesday, April 9, 2014

Between Caffe Italia on Blvd St. Laurent and Caffe San Simeon on Dante mid way between St. Laurent and St. Dominique, there are about sixty footsteps. Most habitues of the one occasionally wander over for a chiacchierata with a buddy that's waiting for another buddy but likes the charm of one Caffe more than the other. These days however, the coffe-shops are filled with raucous and discussions of which Liberal MNA will get which cabinet post and, if you listen very attentively without closing in-some people may get the wrong vib, whether the Italian MNA-Rita de Santis will get anything.

In my opinion, de Santis is a gutsy lady. She showed up to the Party when most members were licking their wounds, tying new knots or fading into prehistory. As a junior MNA she assumed the role of Health critic and for most of the time was soft-spoken with little media visibility. According to many, that was the best thing she did. Glitter and glamour don't befit her. The lady has a Biochemistry background before taking her McGill Law degree and moving up the difficult trek at Davies Ward Phillips Vineberg to become a Partner. The rest is part of the profession's gilted secrets.

Do you give her a gender ministerial role? come onragazzi, this is Little Italy, those days are gone.
Do we keep her away from Business? I liked that approach from a nonno, waiting for the nod, but the nod never came? My first reaction was -apart from Finance most roles in the area are junior. No Besinessss! said hiscumpar
Plug-ins as recognition of loyalty and deserving of merit: immigration, culture, and other elements in that subset. No!No! E piu ingamba! saith the Caffe owner.
Education? says the Mercedes owner. Some kid from Casgrain near St. Zotique who attended Concordia University a few years ago remembers her as a bit too intransigent: Fammi 'sto piacere..qualch'altro posto per l'Avvocatessa.

Well, she's smart lawyer, intransigent (have a problem believing that), loyal, gutsy, ambitious, perfectly bilingual, also speaks "I-talian" according to a Boston tourist that visits his mom every six months. From the corner table Virgilio throws out- e perche non Justice, Sante, Energie. She was after all, it seems, mentored by Me. Ciaccia- a former Bourassa cabinet minister for Energies et Ressources (1985-89). Virgilio has been around for a lifetime-according to some. They brag that all he eats is rapini. Now Energy covers big files and big issues and big business,and she's acquainted very well with the operations of Hydro Quebec.

Positions formed and conversations, sometimes monologues dragged on, tugging one way and the other. It had been a while that Little Italy had been so a-buzz with bickering. The last noise was, I think, Sunday morning after the Soccer matches. This time the buzz was pleasantly enjoyable. Uno !! NO, UNA dei nostri, piuttosto delle NOSTREwas breaking through, and from their perspective she was better than tutte le altre with the exception of one, according to un commendatore, (figuratively), a darling of Quebec and Canada-Marie-Josee Drouin, now Marie-Josee Kravis, from Ottawa, who unfortunately never ran for public office, and has since, like many others, left La Belle Province and le Pays du Nord for the world.

As for de Santis. I like Tullio's outburst. Justice! Ci vogliono cogl.... e lei ne ha! Some expressions get Lost in Translation.

Ministre de la Justice: sounds fine. Balance out the snickers- most modern jurisprudence has origins in Roman Law, and this should weigh in against the -phobes. But then she likes to travel the trade routes, the human right routes...her parliamentary Committee work is also the world at large to the US, Europe, the rest of Canada. Yet, I still think Justice is a good fit.

So is Ministre de la Sante et des Services sociaux: Big in the US, Big in Canada and BIG in Quebec. BIG Challenge for a Gutsy Lady. La Sante a good fit.

Bets? ummm...too early in spring.

PS. If you're lucky while strolling through Little Italy, towards Caffe Via Dante (another well kept secret for a good restaurant) and Patisserie Alati-Caserta (best Zeppole di San Giuseppe in the world) you may catch a glimpse of another of La Petite Italie's best kept secrets-Angelo Mingarelli -probably the world's best mathematician in his field, walking his infamous dog.

but we all churn the images of the poet during our daily walks to office, plant, school, play and home. We revisit the same images metaphorically in conversation about the politics of the day, of the weeks and months, and of coming years. The imagery is universally present. Yet, notwithstanding how admirable the bard's prowess in designing one of Quebec's spoken languages, and unraveling the season's mystery-Quebec politics, and the recent Quebec electoral results makes for equally majestic reading during this 'Cruellest of Months'. Even stern Tom Eliot would agree that Marois' short-lived minority government ended with a 'bang' and not a 'whimper' for most Quebecers. In this sense, we relive the ambivalent April of Eliot and Chaucer in the oxymoron character of political life, its " bitter sweet" season: but never more poetically than in the Fall of one Government and Rise of a new National Assembly controlled by a Liberal majority.

In tune with Chaucer's best and brightest, This Liberal Majority should promise Quebec

growth and health as Nature renews its own commitments during this Spring.

In marked contrast to Nature's glory, a quote attributed to Abraham Lincoln serves best as to the reasons for the Parti Quebecois' Great Rout of 2014

"You can fool all the people some of the time,

and some of the people all the time, but you cannot fool all the people all the time."

Quebecers have had enough of vacuous and pompous rhetoric. Contrary to some media coverage-most Quebecers rejoiced in dismissing the gratuitous platform of a waning and unenlightened political Party minority while Quebec citizenry endured the dismal woes and dire pangs of economic misfortunes. Quebec leads the country in public debt notwithstanding the highest tax imposition rates in the country. It tops the migration list with most departures, staggers in growth and straddles with respect to trade.

Earth's young history has had a Prague spring, a Chinese Spring and an Arab Spring, and who knows how many more unsung springs. For some of us less ambitious in scope, but more resilient to the caveats of Quebec Politics-we can finally acclaim a blooming Quebec Spring greeted by Nature and Nurture's 'sweet showers'. Similarly, as far as Quebec Politics goes, when it rains it pours and yesterday's Parti Quebecois debacle was a predictable downpour given the unfounded policy options and sham debates of the party's platform.

Unfortunately, it left the 2014 National Assembly with two incumbent members of and a newly elected MNA from the riding of St Jerome, m. PELADEAU, whom some would caricature as the Teflon Kid. With the presence of the Messrs. Drainville, Lisee, (exit Bureau-Blouin branded as Kid Kodak) and Peladeau, the opposition in the National Assembly has reduced its status from tolerable to mediocre. Its brightest members, with the exception of Mme Marois, all defeated. Honest Parti Quebecois women and men, again with the same exception, suffered the slings and arrows of outrageous fortune that ensued from ill-founded social and economic platforms framed by a vacuous group of aspirants and opportunists who placed personal vanity before Quebec's future.

Attributed to Mark Twain, the following offers the appropriate wit in their regards:

As a result the defeated PQ women and men, again excluding the same Marois, deserved no better than a rout, and with the Party's remaining four above-mentioned should expect nothing better in the future...

The fate of the Parti Quebecois lies in the hands of ex-MNA Kid Kodak and the Teflon Kid, and the two feuding amigos.

For this majority Liberal Assembly, led by a talented Philippe Couillard, to sustain momentum, it must rally around economic issues, and put aside social and political irritants. It must stop the emigration wave and momentum that is plaguing Quebec demographics. It must abandon the idea that balanced budgets are solutions to financial stability; it should assume with resolve the need to create deficits if necessary- dislodging the unsupported myth that deficits harm an economy and a society. US economic policy for over half-century has instances showing the contrary. US economic policy since 2008 shows quite the contrary. Look South, not only for wisdom but for vision after failure.

Premier Couillard must establish coherent regional initiatives that put people to work. Invest heavily into education, biomedical research and development and infrastructure to support and promote preventive medicine, and eliminate the bottlenecks and impasses that contaminate the health system and undermine the social and economic fabric of Quebec society. This new Government should propose improved benchmarks that contain a measure of competitive resolve and realistic visions, calibrated by Quebec's resources and expectations, and desire for innovation.

There is no expectation to be the best first time around; there is a need to show that we are on the way to becoming the best!. That will attract immigration and retain citizens; Fiscal and industrial initiatives must be supported by expansionary fiscal policy at the individual and corporate level. Quebecers are an innovative people; our society and our government must provide the appropriate ecology for innovation.

It was and is now time for economic innovation and action, and the mandate of this Liberal Victory should focus on the economic future of Quebec society. Philippe Couillard's Liberal Majority cannot repeat the omissions of its predecessor.

Thursday, October 31, 2013

A few weeks ago, after picking up 'un po di scarola e romana' for my mom au Marché Shamrock, now called le Marché Jean Talon, I ventured southwest towards la Frutteria Milano on Blvd. St. Laurent (where DiStasio is an habitué-we love her for that) in Montreal's Little Italy. Then fifteen steps south I hopped into Caffè Italia for 'un freddo'. Paolo, a Bruin's fan and bartender, asked how two of my kids were, and we exchanged a few words concerning the hockey season. During the conversation, the bartender signaled that someone was trying to catch my attention. I turned around and after a few embarrassing moments recognized an old friend. He invited me to his table swamped with some papers and a PC, a buttered toast and a cappuccio. The casual setup of shifting and moving chairs and tables makes 'Italia' like most other cafes in the area ideal for dabbling about anything and everything, regardless of the next table's proximity. So we tried (one always forgets the details) to update each other on our lives, shuttling between three languages that somehow we had never mastered, amidst the raucus that makes "Italia" unique for most of Little Italy's habitués and turisti, and among the turisti include those that escaped years ago and now show up amidst the glimmer and the trend, the rattle and hum- i tipi di spiaggia.

He commented on federal politics, we talked about some cherished laughs and a lot of art. In the end, he ventured onto his health which he claimed was failing. He enjoyed the elder years more than he had imagined. He scrolled his worst and best in that order, and nostalgically mentioned a blog he had started but abandoned about eighteen months ago. Although short-lived, and rarely commented, he had achieved some satisfaction from the political and economic monologue he authored. He never signed it, choosing the anonymous, and to his own amusement, regarded his own authorship cynically. Yet the nostalgia of 'letting-it-go' irritated him as much as the 'acouphene's' stress while he wrote and proofread it. After 'un po' di tutto e di tutti', he tossed the offer: "...you want to pick it up. I'm done. It's all yours" That intrusion was short. We moved on to reminiscing again about 'Tizio e Caio' about so-and-so and 'remember that guy..what the hell- is- his- name-? to how much time left to finish reading Balzac's la Comédie humaine. As the bleak mood dampened, I was reminded of Philip Larkin's Audabe, and felt the eerie shiver of a second reading of those morbidly beautiful lines:

The mind blanks at the glare.
Not in remorse

—The good not done, the love
not given, time

Torn off unused...

Yet memory is sometimes the best of friends. Like an enzyme: it can, when the need be, act as repressor, catalyst and liason; but this time there was no creative biochemical challenge to the dire mutant that dark Larkin had spliced, only consolations and devastations.

From Donne'srationalized inspiration to Dylan ThomasDeath shall have no Dominion, and Do not go Gentle into that Good Night,the consolation is meagre and impoverishing. Memory only unravels sympathy and empathy for Larkin. Larkin's deep and shattered voice was his own; not the voice of another for another. Indeed Larkin's confessional is grueling intake.

We exchanged email addresses.

And after twenty dollars of 'cappucci e cioccolati caldi' and twenty of buttered toasts, he silently got up. I felt like Coleridge's Wedding-Guest in the Ancient Mariner as I watched him walk away.

I checked out the blog and yesterday night- I took him up on the offer. I asked that he sign off with a final post. He refused the demise: his output was in the blog's archive. Hopefully I will try to improve on my language triathalon.

In passing, if you want to try another good Italian coffee, go down towards Dante and St Dominique and step up into San Simeon's-it's famous for its terrace, and then browse into Venditelli's Ferramento Dante, ten steps east (la Quincaillerie Dante) made famous by the hardworking V sisters and brothers at a time when DiStasio was still too young to cook. And if you keep apace on Dante Street, you'll probably meet the best kept secret in the country walking at a hurried pace, a passionate jazzman: Giorgio Serafini-

Tuesday, April 10, 2012

Why am I holding Euros???

The most obvious question to oneself these days, especially if one's a fund or an institutional, is Why aren't we bailing out of Europe...If you're the client, the question to your advisor: Why are you holding on to Euros? The obvious explanation is: cognitive dissonance. The hypothesis was advanced by psychologist Leon Festinger (1957).It became popular among political pundits and business types quite rapidly when, years later, Newell and Simon* integrated Festinger's insights into their own hypothesis concerning human problem-solving.

The Newell-Simon model as it is now labelled, named after Allen Newell and Herbert Simon, describes how human beings make decisions, ie. solve problems. It becomes especially enlightening when it describes how people react during the intellectual logistics of problem-solving: the intelligence phase, design phase and choice phase.

How do investors react to conflicting attitudes: you hold Euros but everyone calls a crash.

Decision-makers, when in doubt, will "listen" 'more' to information that supports their belief system than to information that disrupts or questions their belief system. The underlying hypothesis is that the individual seeks to reduce dissonance or accompanying discomfort created by conflicting information that undermines his position. He will settle for 'satisficing' information without claim to making the optimal decision.

But in many cases, he will side with inputs that justify his original position. Of course, the more individuals are rationally bound (you don't have all the info) the more they will attempt to adjust in a timely satisficing way to the facts. If the former, You could be a die-hard and lose your pants and that of your clients, notwithstanding the information; if the latter, you could be pragmatic, give yourself and others the benefit of the doubt, and bail-out. After all, the well-known economist and investor John Maynard Keynes evoked the perfect reaction to relieve the dissonance: "When the facts change, I change my mind. What do you do, sir?"

So why are some investors still holding on to the Euro securities...for the same reasons that some European leaders keep promoting austerity measures for public policy notwithstanding the adverse results being generated in Greece, Spain and Italy.

The dissonance:
Firstly, even though things are difficult in Europe, they're difficult all-around the world. Some will argue that they're already overexposed in equities, in BRICs, in US and other sovereign currency-issuer securities, and even gold-it can collapse on a wind-shift....after which deliberation they move on and argue the next....

...Eurozone economies are not in as bad a condition as selected data suggest. It's quite reasonable to experience hiccups during 'policy transitions' after traveling over rocky roads. And Southern European roads are very rocky according to northern Europeans. Things will smooth themselves out over time. The worst case is if Greece defaults. Let it exit. Nudge Greece out gracefully. The Zone is saved. This is the message that is being conveyed by European leadership as social tensions in certain countries become more forceful. If that doesn't work out as planned....they move on and argue the next....

...Europe is 'too big to fail'. (Remember Lehmann et al). The US and China won't let it happen- this is Europe, not some mismanaged bank. Some refer to this position as highly speculative; other would consider it quite realistic. Either way, their rationalization recalls Lord Byron's popular but mistranslated line found in his Childe Harolde's Pilgrimage :

When falls the Coliseum, Rome shall fall;
And when Rome falls--the World.'

The Eurozone rendition is "When falls the Euro, Europe shall fall; And when Europe falls---the World."

It would carry more credence if it was the US, however.

Here's my take: If China's growth is projected downwards, if Germany's order book starts doesn't refill to 2010 levels (I don't think it will refill for a long while) and growth in the US is revised downwards, then you should have bailed to liquid USD, until the facts change!!! If you didn't, think about it.

Monday, April 9, 2012

Europe! It's not too late to reverse austerity

The article is cross-posted on Fictional Reserve Barking. We wish to thank the editor. Readers are invited to post comments on either blogs.

Months ago we outlinedthe challenges that presented themselves to Italy and Greece, and to Germany, France and the United Kingdom. We opted against austerity, trusting that the technocratic appointments of Messrs Monti and Papademos could transform governments in Italy and Greece, and enable their respective legislatures to both recommend alternative and optimal public expenditure policies and to restrain policymakers from endorsing imposed fiscal restrictions while constraining budgets any further.

More ironic is that both men had very little to do with the original debacle. They were recommended to their nation’s legislatures to clean up a mess. Instead, as a result of attempting to implement austerity measures, they have generated more anxiety in world markets than expected.

Unfortunately, the recent economic deterioration and rising social tensions within their respective economies has become their responsibility, and the political disenchantment surfacing within the electorate is also their responsibility. Worse still, the time for apologetics is long past and is now irrelevant. At jeopardy is their leadership, the credibility they endorse for their visions of the future and the overall well-being of their citizenry.

Mr. Draghi and Mrs. Lagarde have voiced a redemptive message. Both had professed that the worst was over. For instance, in aspeech on March 26 of this year, Mr. Draghi said the following:

“I would like to take this opportunity to provide you with my assessment of the current situation in the euro area and shed light on recent signs of improvements in the overall outlook. I would particularly like to draw your attention to the effectiveness of the policy measures implemented by the Eurosystem, the EU institutions and national authorities. And to remind you of the measures that we all must continue to pursue over the coming months and years with great diligence in order to continue on this path of stabilisation.”

As for Mme Lagarde, on March 18 of this year, the Managing Director of the IMF sought to reassure the audience of the 2012 China Development Forum with the following statement:

“There are signs that strong policy actions—especially in Europe—are making a difference. Financial markets have become a little calmer…”

Yet, Spanish yields are rising, as are those of Italy and Greece, and there is more and more talk of a potential third bailout for Greece although the IMF and the ECB have reassured the investment communities that changes in Greece are being introduced as promptly as possible and will be enacted effectively.

Any remnant stress in markets, according to the institutional duo is a result of the misperception by the interested communities that the consolidations proposed by the ailing economies cannot be achieved.

The emerging doubt on behalf of investment communities and investors in general should not be surprising. After all, it’s their money and it’s their perception that underscores investment decisions.

One daresay that the investment community saw the collapse of the system much earlier than either the IMF or the ECB, although the leadership of the latter two has been proactive in attempting to stabilize investor sentiment and mitigate between some form of restraint and investment in growth and employment. Notwithstanding, the reassessment that further bailouts will be necessary is now the swan song of European austerity politics.

Unfortunately, European policymaker perceptions of the bond markets are completely skewed as a result of their own biases. What is difficult for them to appreciate is that there is no basis left for growth. Unemployment is up, with Spain leading at 23.6% followed by Greece at 21.0%. And in those Eurozone countries where unemployment rates are low, many of the employed are part-time workers and, as such, susceptible to labour volatility during these turbulent times.

Moreover, capacity utilization in the manufacturing sectorover the last four quarters is dropping across the Eurozone at alarming rates. Order books are not being filled as quickly as desirable, and their durations and size are shorter than required to support additional investments. As a result, business investment is stalling as management constrains expenditures and saves its liquidity for dividends in lieu of growth to stabilize share values, foreboding that equity markets react adversely to this dilemma and possibly falter.

What most pundits expected from the emerging markets may not be realized: trusting that BRIC plug the slowdown in Europe, with China leading the way. Unfortunately, there is no plug. Most informed observersnow mitigate between a slowdown and an ease in aggregate demand, with China’s future growth rates in question. Projections for the region suggest that China’s growth potential could be in the midst of a major contractionwith rates dropping to 7.5% from anticipated 8% and over.

Given the above, the most difficult challenge in domestic politics is for any Government to admit that it followed the wrong track. There is no shame in being part of a bigger bloc of nations that propound fiscal consolidations even if austerity is showing itself as being the ineffective solution to the Eurozone’s financial crisis, a crisis which is now becoming an economic and political crisis.

It actually takes great courage in admitting that the austerity programs recommended may not work out. The experiences of other nations in the matter, elicit danger signals that can’t be overlooked. In such a case, the consolation is that if one’s admission is timely, the Government may come out of an unfortunate situation looking respectful and remarkably diligent. There is still time for Europe to turn back its political agendas before turning the wrong corner.

Thursday, January 12, 2012

Austerity Contracts Italy and in turn Germany

ISTAT, Italy's National Statistics Institute has had a busy December 2011-end. ISTAT released October's monthly stats. The results are not good. In fact, the results were not good for any of the critical markings: the releases confirmed decreases in the Orders, Production in Construction, and Trade Balance. Then, ISTAT published Italy's quarterly GDP.

The decease in GDP suggests that the Austerity measures being promoted by the Euro-Area and traditionally recommended by the IMF for struggling economies are counterproductive: detrimental to the health and growth of the Italian economy. That's not new. The results are, however, significant because they offer the economist-Prime Minister Mario Monti an acid test that the austere remedy preferred by the markets, in the longer run, will weaken the economic infrastructure of the country, induce social tensions and may trigger social unrest thereby further stiffening Italy's already fragile capacity to access reasonably priced funds from future markets. After all, once reimbursement of capital is made, there is no obligation on the part of the investor to revisit and refinance a palliative patient.

For the obstinate, the position that austerity is not necessarily linked to contracting economies is a reasonable stance. In fact, for the majority of austerists, if one can coin the label, there is no necessary relationship between austerity measures and contracting economies, where contraction is usually defined as an economy in which gross domestic product weakens for two consecutive quarters.

Orders were down in October 2011 by 4.8% over the same month in the previous year 2010. In October 2011 the seasonally adjusted industrial new orders index decreased by 1.6% with respect to September 2011 (-1.0% in domestic market and -2.4% in non-domestic market). The percentage change of the average of the last three months compared to the previous three months was -2.3 (-0.7 in domestic market and -4.7 in non-domestic one). Although adjusted industrial turnover index, which measures current dollar sales was up by 1.1% for the same periods, the medium and longer term effect of orders is critical to the growth and stability of the country, whereas industrial turnover results are an historical metric that is already integrated into the fourth quarter's projections. Traditionally, orders underscore the basic fabric of small and medium business which constitute the majority of regional economies in central and southern Italy. The significant indicator to watch is the Order Book, especially for export orders since Eurozone orders will certainly decrease all around given the need to cut back on spending: consumer spending will drop and business will limit its investments in order to buffer cash for a 'transition' towards a better investment climate.

Germany, on the other hand appeared to be steering through the storm. Unfortunately,recent indicators, especially the Order Book for Exports is designing a pessimistic future. Counterbalance to a drop in export orders is a suggested increase in consumer spending. I think pundits are overly optimistic about Germany's population continuing to bear the load of a European economic stall. Not only is unemployment inching up in 2012, savings will also inch up and business investment will decrease quickly and for a prolonged period.

The lesson of Austerity is that its negative effects profuse through the system much more quickly than market reinvestment. Once markets realize that an economy is slowing down, they will forestall decisions to reinvest capital, which in turn will stall growth. Austerity leads to a vicious circle and insidious downturn,especially during a global slowdown. We said it in an earlier post:

Evidently, once investors realize that the longer term confidence required to justify purchasing Eurobond securities is not justified by output figures from the region's business sector, then even if your brand name is Germany, and even if the rating agencies mark you tops, it won't help keep yields down. Germany is as susceptible to being dumped as is Italy and its next candidate France which witnessed its yields increase, and its yield gaps widen against the German counterparts. There is no Immune Boutique in this Shopping Mall. There isn't any vote of confidence for Germany; rather it signals that investor concern is becoming pandemic within the Euro-Area and no sovereign, especially a non-sovereign issuer, is immune.

and we will repeat again: Mrs. Merkel, like all others including Mr. Monti, is neither immune to the consequences of Austerity nor to the whims of the markets. It's time to change tune before the audience boos the performance or rather lack thereof.

Sunday, January 1, 2012

Fictional Reserve Barking invites Keynes and Godley to Dinner

Fictional Reserve Barking (FRB), not yet completed its first anniversary from inception, has assumed the role of one of the most daring commentaries on national and international political and economic policy on the B-sphere. Admittedly sympathetic to post keynesian monetary theory, FRB has again challenged the reasonableness and timeliness of everyman's expectation that Central Bankers cause and hence should solve all the problems of Government and Public Finance. In its December 31, 2011 issue, FRB has demonstrated again why it is considered a must and best read for economic policymakers and pundits alike. Never faltering from its underlying prescriptive mission, FRB continuously substantiates the empirical legitimacy of its optics, realigning and calibrating vision as the facts require, but never wavering on the paradigm invoked.

To say that Fictional Reserve Barking and its prolific author Circuit, is merely a keynesian sounding board is to demean the intellectual prowess of its endeavor. To even suggest is to stunt the brilliant insights that Circuit and moreso the FRB's Wall of Fame profess. And Wall of Fame it is! Among the cherished heritage FRB preserves and promotes, one finds classic Keynes, Galbraith, Godley in continuous medley with such contemporary classicists Lavoie, Seccareccia, Volcker, Bernanke, Wolf, Wray, Krugman, Mosler, Lerner, the BIS. Never admonishing, always respectful, FRB is a classical Podium of Great Policy in the making.

As one of its readers noted a while back, FRB never assumes as own the merit of others: it is by far the most serious and integral online conversation in political economy in the language, similar to Martin Wolf of the Financial Times for both scope and depth, and come the day, as notorious.

You may not agree with the script , but you never move on offended. Accessing FRB is like sitting back for a brilliant and enjoyable conversation over the dull-made-glamorous. There was a time when accountants and investment bankers were boring. Then they became glamorous-pin-up persons for the young and ambitious. History has shown them rich yet infamous and forever dull. FRB makes policymakers, economists and central bankers the new pin-ups: exciting, audacious, bright and magnanimous when they have courage, but not necessarily rich. Therein lies the rub! or is it the crux?

The latest FRB commentary on the role of the Bank of Canada in defining economic policy and delimiting monetary responsibility from fiscal initiatives, and then going on to analyze the impact of deficit spending on household and business investment is a superb application of Godley's sectoral balance to Canadian political economy and the planning process for 2012 Canadian public finance.